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In proposed regulations issues this week by HHS they are
proposing a change to how the $63 transitional reinsurance fee will be collected from
employers. We have copied the section from the regs below. This changes
slightly how employers have been planning to pay this
fee. Basically, instead of the full $63 being due at the end of 2014 or in very early 2015 employers will only pay $52.50 at that time, then the extra $10.50 would not be due
until fourth quarter 2014. Also note that the proposed fee for 2015 is
$44.
This could impact how some employers budget for this fee, especially the larger ones. See the below excerpt for details and please not that these are only proposed regulations. However we would be surprised if this section changed before going final.
$12 billion for 2014, $8 billion for 2015, and $5 billion for 2016 – will result in substantial upfront
payments from contributing entities for the reinsurance program. Therefore, we are
proposing to modify our collection schedule for the program, so that we would collect the
reinsurance contribution amounts for reinsurance payments and for administrative expenses
earlier in the calendar year following the applicable benefit year, approximately in accordance
with the schedule currently described in §153.405(c), but collect the reinsurance contribution
amounts for payments to the U.S. Treasury in the last quarter of the calendar year following the
applicable benefit year. Therefore, we propose to modify §153.405(c) so that a contributing
entity would make reinsurance contributions in two installments to HHS – one at the beginning
of the calendar year following the applicable benefit year, and one at the end. As noted in the
second final Program Integrity Rule, the proposed policy is designed to alleviate the upfront
burden of the reinsurance contribution, allowing contributing entities additional time to make the
payment. We note that the proposed change in the collection schedule would not affect the
amount of funds collected for reinsurance payments. Additionally, the amounts allocated to
reinsurance payments and administrative expenses are needed to operate the reinsurance
program, while the amounts allocated for payments to the U.S. Treasury are not needed for the
operation of the transitional reinsurance program. Therefore, collecting the amounts allocated to
payments to the U.S. Treasury later in the calendar year following the applicable benefit year
will not affect the reinsurance program, and will alleviate a contributing entity’s upfront financial
burden.
Under this proposal, the first of the two
installments each year would include the
reinsurance contribution amounts allocated to
reinsurance payments and administrative expenses.We propose in §153.405(c)(1) that following submission of the annual enrollment count, HHS
would notify a contributing entity of the reinsurance contribution amount allocated to
reinsurance payments and administrative expenses to be paid for the applicable benefit year. If
the enrollment count is timely submitted, HHS intends to notify the contributing entity by
December of benefit year 2014, 2015, or 2016, as applicable. We note that, due to our desire to
align the notification of reinsurance contributions due with our monthly payment and collections
cycle, this schedule differs slightly from the schedule currently set forth in §153.405(c)(3), which
provides for notification by the later of 30 days of the submission of the annual enrollment count
or by December 15. We propose in §153.405(c)(3) that the contributing entity remit this amount
within 30 days after the date of the first notification.
The second installment would cover the portion of
the reinsurance contribution amount
allocated to the payments for the U.S. Treasury to
be paid for a benefit year. We propose in§153.405(c)(2), that in the fourth quarter of the calendar year following the applicable benefit
year, HHS would notify the contributing entity of the portion of the reinsurance contribution
amount allocated for payments to the U.S. Treasury for the applicable benefit year. Again, under
proposed §153.405(c)(3), a contributing entity would remit this amount within 30 days after the
date of this second notification. We note that the contributing entity would be required to submit
an annual enrollment count only once for each benefit year under §153.405(b).
For example, for the 2014 benefit year, of the $63.00 annual per capita contribution rate,
$52.50 would be allocated towards reinsurance payments and administrative expenses, and
$10.50 towards payments to the U.S. Treasury. Thus, we contemplate that if a contributing
entity submits its enrollment count for the 2014 benefit year in a timely manner (by November
15, 2014), a reinsurance contribution payment of $52.50 per covered life would be invoiced in
December 2014, and payable in January, 2015. Another reinsurance contribution payment of
$10.50 per covered life would be invoiced in the fourth quarter of 2015, and payable late in the
fourth quarter of 2015.
We propose that for the 2015 benefit year, the
proposed $44 annual per capita
contribution rate be allocated $33 towards
reinsurance payments and administrative expenses,and $11 towards payments to the U.S. Treasury. These amounts would similarly be payable in
January 2016 and late in the fourth quarter of 2016, respectively.
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